M21-1MR, Part IV, Subpart ii, Chapter 2, Section F
Section F. Compensation Based on Individual Unemployability (IU)
Overview
In this Section
/ This section contains the following topics:Topic / Topic Name / See Page
24 / General Information on IU Claims / 2-F-2
25 / Evaluating Evidence to Establish Entitlement to IU / 2-F-3
26 / Evaluating Evidence of Self-Employment or Employment With a Tightly Held Corporation / 2-F-8
27 / Preparing a Rating Decision Addressing the Issue of IU / 2-F-10
28 / Special Considerations in IU Claims / 2-F-16
29 / Exhibit 1: Rating Decision Addressing Veteran’s Failure to Complete a Field Examination / 2-F-25
30 / Exhibit 2: Rating Decision Addressing Veteran’s Failure to Respond to a Notice of Proposed Adverse Action After Failure to Complete a Field Examination / 2-F-28
31 / Exhibit 3: Rating Decision Addressing the Subsequent Receipt of Evidence That Restores IU After Failure to Complete a Field Examination / 2-F-27
32 / Exhibit 4: Poverty Threshold Information / 2-F-29
24. General Information on IU Claims
Introduction
/ This topic contains general information on individual unemployability (IU) claims, including· establishing entitlement to increased compensation based on IU
· unemployability vs. unemployed and unemployable, and
· the definition of substantially gainful employment.
Change Date
/ December 16, 2011a. Establishing Entitlement to Increased Compensation Based on IU
/ To establish entitlement to compensation as if 100 percent disabled based on individual unemployability (IU), a Veteran must be unable to secure or retain employment by reason of service-connected (SC) disability. The Veteran must be unemployable in fact by reason of SC disability and either· meet the schedular requirements of 38 CFR 4.16, or
· have an extra-schedular evaluation approved by the Compensation Service (211B).
Notes:
· IU is also referred to as total disability based on individual unemployability (TDIU).
· IU must be established on a factual basis.
b. Unemployability vs. Unemployed and Unemployable
/ The term unemployability is not synonymous with the terms unemployed and unemployable for the purpose of determining entitlement to increased compensation. A Veteran may be unemployed or unemployable for a variety of reasons.A determination as to entitlement to a total evaluation based on unemployability is appropriate only when a Veteran’s unemployability is a result of SC disabilities.
c. Definition: Substantially Gainful Employment:
/ Substantially gainful employment is defined as employment at which non-disabled individuals earn their livelihood with earnings comparable to the particular occupation in the community where the Veteran resides.25. Evaluating Evidence to Establish Entitlement to IU
Introduction
/ This topic contains information on evaluating evidence to establish entitlement to increased compensation based on IU, including· general evidence requirements in IU claims
· medical evidence requirements in IU claims
· handling incomplete medical evidence
· employment history requirements in IU claims
· requesting employment information from employers
· when to obtain
- Social Security Administration (SSA) reports in IU claims, and
- vocational rehabilitation records in IU claims
· identifying reasonably raised claims of IU, and
· processing reasonably raised claims of IU.
Change Date
/ September 15, 2011a. General Evidence Requirements in IU Claims
/ A decision concerning entitlement to an IU evaluation is based on a review of all available evidence, which should be sufficient to evaluate both the Veteran’s· current degree of disability, and
· employment status.
Forward a VA Form 21-8940, Veteran’s Application for Increased Compensation based on Unemployability, to the Veteran if a request for IU is
· expressly raised by the Veteran, or
· reasonably raised by the evidence of record.
Note: Although a VA Form 21-8940 can be an important development tool, it is not required to render a decision in an IU claim.
Important: A claim for IU may consist of any written communication indicating a Veteran is unable to work because of SC disability.
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25. Evaluating Evidence to Establish Entitlement to IU, Continued
b. Medical Evidence Requirements in IU Claims
/ A claim for IU must contain sufficient medical evidence to support a current evaluation of the extent of all the Veteran’s disabilities.The evidence should reflect the Veteran’s condition within the past 12 months and include, but need not be limited to
· the results of VA examination(s)
· hospital reports, and/or
· outpatient treatment records.
c. Handling Incomplete Medical Evidence
/ If the medical evidence of record is incomplete or inconsistent, schedule a medical examination.Request special tests only when required for proper evaluation of the degree of severity of relevant disabilities.
Reference: For more information on scheduling examinations, see M21-1MR, Part III, Subpart iv, 3.B.
d. VA Form 21-8940 Employment History Requirements
/ VA Form 21-8940 requires the Veteran to furnish an employment history for the· five-year period preceding the date on which the Veteran claims to have become too disabled to work, and
· entire time after the date on which the Veteran claims to have become too disabled to work.
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25. Evaluating Evidence to Establish Entitlement to IU, Continued
e. VA Form 21-4192 – Requesting Employment Information From Employers
/ Request each employer for whom the Veteran worked during the 12-month period prior to the date the Veteran last worked complete and return VA Form 21-4192, Request for Employment Information in Connection with Claim for Disability Benefits. At the same time, send a copy of VA Form 21-4192 to the Veteran.If VA Form 21-4192 is not received from the Veteran’s employer(s) within 30 days
· send a follow-up request to the employer(s) for VA Form 21-4192, allowing an additional 10 days for response, and
· notify the Veteran that
- the employer has failed to respond to VA’s request, and
- it is ultimately his/her responsibility to obtain this information.
Exception: Do not send VA Form 21-4192 to the Veteran’s last employer if it has been more than five years since the Veteran last worked.
Notes:
· If the information on VA Form 21-4192 only states that the Veteran retired, then request additional information as to whether the Veteran’s retirement was by reason of disability. If so, ask the employer to identify the nature of the disability for which the Veteran was retired.
· Do not deny an IU claim solely because an employer failed to return a completed VA Form 21-4192.
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25. Evaluating Evidence to Establish Entitlement to IU, Continued
f. When to Obtain SSA Reports in IU Claims
/ Obtain and consider complete copies of the Social Security Administration (SSA) decision (grants and denials) and any supporting medical records when· evidence of record is insufficient to award increased compensation based on IU, and
· the Veteran’s claims folder shows that the Veteran has been examined or awarded disability benefits by SSA.
Notes:
· Although decisions by SSA regarding a Veteran’s unemployability are not controlling for VA determinations (and vice versa), SSA’s record may indicate the level of impairment of the Veteran’s SC disability.
· When reviewing SSA records, pay close attention to what disability resulted in a grant of SSA benefits, and whether that disability is one for which service connection has been granted.
References: For more information on
· requesting information from SSA, see M21-1MR, Part III, Subpart iii, 3.A, and
· the effect of SSA decisions regarding unemployability on VA determinations, see Murincsak v. Derwinski, 2 Vet.App. 363 (1992).
g. When to Obtain Vocational Rehabilitation Records in IU Claims
/ When a Veteran’s claims folder indicates that he/she was seen by the Vocational Rehabilitation and Employment Service (VR&E), obtain and evaluate any records related to this contact.The VR&E records may
· document the Veteran’s participation in a training program, or
· show that training was not feasible or was unsuccessful.
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25. Evaluating Evidence to Establish Entitlement to IU, Continued
h. Identifying Reasonably Raised Claims of IU
/ Reasonably raised claims for IU may arise in a Veteran’s original claim or in a claim for an increased rating. The Department of Veterans Affairs (VA) must consider a claim for IU if· the Veteran’s SC rating meets the minimum schedular criteria found in 38 CFR 4.16(a), and
· there is evidence of current SC unemployability in the Veteran’s claims folder or under VA control.
Reference: For more information on reasonably raised claims for IU, see
Norris v. West, 12 Vet.App. 413 (1999).
i. Processing Reasonably Raised Claims of IU
/ When a reasonably raised claim for IU is identified, and additional evidence is needed· rate all other claimed issues that can be decided
· show the issue of potential IU entitlement as deferred in the rating decision
· develop the reasonably raised IU issue under the existing end product, which will remain pending until a merits determination of IU entitlement is made, and
· send the Veteran the section 5103 notice, enclosing VA Form 21-8940 for completion.
Notes:
· Do not send a Veteran VA Form 21-8940 to complete if
- the schedular requirements of 38 CFR 4.16 are met, but
- there is no evidence of SC unemployability.
· A subsequent formal rating decision will be required to dispose of the issue of entitlement to a total evaluation based on IU, even when the Veteran fails to return VA Form 21-8940.
Reference: For more information on section 5103 notices, see M21-1MR, Part I, 1.A.2.
26. Evaluating Evidence of Self-Employment or Employment With a Tightly Held Corporation
Introduction
/ This topic contains information on evaluating evidence of self-employment or employment with a tightly held corporation, including· self-employment development
· deciding whether self-employed individuals are unemployable due to a SC disability
· the definition of a tightly held corporation, and
· evaluating evidence showing income from a tightly held corporation.
Change Date
/ September 8, 2009a. Self-Employment Development
/ Development to produce the evidence necessary to establish the degree to which SC disability has impaired the Veteran’s ability to engage in self-employment must generally be more extensive than development in cases in which the Veteran worked for others.Request that the Veteran furnish a statement regarding the
· types of work performed
· number of hours worked per week, and
· amount of time lost in the previous 12 months due to SC disabilities.
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26. Evaluating Evidence of Self-Employment or Employment With a Tightly Held Corporation, Continued
b. Deciding Whether Self-Employed Individuals Are Unemployable Due To SC Disability
/ When determining entitlement of self-employed individuals to increased compensation based on IU, consider the relationship between the frequency and the type of service performed by the Veteran for his/her business and the Veteran’s net and gross earnings for the past 12 months.Consider facts of the case, such as
· low gross earnings that support a finding of marginal employment, especially when the amount of time lost from work due to SC disablement is taken into account, or
· high gross earnings that indicate the Veteran is capable of engaging in a substantially gainful occupation.
Notes:
· Consider low net earnings in conjunction with gross income.
· The inability to make a profit is not always indicative of the inability to engage in substantially gainful employment.
c. Definition: Tightly Held Corporation
/ A tightly held corporation (or closely held corporation) is usually a family corporation. A corporation bearing the Veteran’s name is usually indicative of a tightly held corporation.d. Evaluating Evidence Showing Income From a Tightly Held Corporation
/ Since the Veteran may control the amount of wages paid to himself/herself, do not make a finding of marginal employment solely on the basis of low wages.Keep in mind that the issue for consideration is whether the frequency and type of service performed by the Veteran equates to substantially gainful employment. Therefore, consider evidence that the Veteran received, or was entitled to receive, other remuneration from the corporation, such as stock dividends or loans, in lieu of wages.
Note: If the reported wages appear low for the work performed, request a field examination per M21-1MR, Part III, Subpart vi, 8.7, to determine the Veteran’s entitlement to the corporation and corporate earnings.
27. Preparing a Rating Decision Addressing the Issue of IU
Introduction
/ This topic contains information on preparing a rating decision addressing the issue of IU, including· considerations when deciding an IU claim
· the applicability of the concept of average impairment in earning capacity to IU claims
· considering multiple disabilities in IU claims
· entitlement to special monthly compensation (SMC) at the Housebound rate if the IU rating is based on one disability
· determining the effect of SC disabilities on employability
· the definition of marginal employment
· reasons for denying IU claims
· formally denying IU, and
· the information to include in the rating decision.
Change Date
/ September 15, 2011a. Considerations When Deciding an IU Claim
/ When deciding an IU claim, the rating activity must take into account· the Veteran’s current physical and mental condition
· the Veteran’s employment status, including
- the nature of employment, and
- the reason employment was terminated, and
· whether
- the disability requirements set forth in 38 CFR 4.16 are met, or
- extra-schedular consideration under 38 CFR 3.321(b)(1) is warranted.
Important: Do not defer a decision as to the schedular degree of disability pending receipt of evidence sufficient to adjudicate the issue of IU.
b. Applicability of the Concept of Average Impairment in Earning Capacity to IU Claims
/ Do not apply the concept of average impairment in earning capacity set forth in 38 CFR 4.1 to determinations regarding IU. This concept applies only to determinations of the percentage of disability for schedular evaluations.Continued on next page
27. Preparing a Rating Decision Addressing the Issue of IU, Continued